Latest Drugwonks' Blog

Yesterday I spotlighted how a recent article in Der Spiegel revealed the burgeoning costs that have already been produced by the latest reforms to the German health care system. Today I want to look at what the article has to say about how the reform has changed the incentives of doctors and sickness funds such that they now profit from making patients as unhealthy as possible – at least on paper.
 
With everyone required to have coverage and premiums fixed nationwide, policy experts in Germany anticipated a problem: sickness funds would look for the healthiest, youngest patients and be reluctant to cover the old or sick. Hence was born the “morbiditätsorientierten Riskoausgleichstruktur,” a mouthful that translates to “morbidity oriented risk adjustment structure” and a concept Germany has in common with countries like the Netherlands, another system sometimes held up as a model for the US.
 
However, although it set out to solve a real problem, it has created a new problem in the process. Since sickness funds get extra money for those with health problems included on the national list (about 80 at the moment), they have an incentive to seek out people with these conditions and to push patients who may be better served by a less serious diagnosis onto these categories. Consider the case of Jens Luther:
 

The 55 year old jogs, rides a racing bike, and eats carefully. As a result, he lives an almost pain free life. He is only occasionally afflicted with a sour stomach, for which each time his doctor prescribes a medicine against heartburn.
         
But with the health care reform, Luther’s condition has worsened considerably. His heart burn grew into a life-threatening reflux disease. The wiry top manager has become chronically ill.

Luther himself hasn’t noticed his terrible pain at all. He looks as fit as anyone; he’s doing great. And if he wasn’t the chairman of the board of the same sickness fund by which he is covered as a patient, he might never have found out that his health situation had deteriorated so dramatically.
 
This kind of reclassification is especially common because the extra the sickness funds receive often exceeds that they spend on care for the condition. For Luther, the sickness fund would get €1079 a year if he was healthy – but the diagnosis of reflux brings an extra €912 a year, even if his actual illness only costs a couple trips to the doctor and some simple prescriptions. The sickness fund then gets to keep the extra money. Der Spiegel reports that this is the case for many illnesses:

High blood pressure brings a bonus of €402 a year. Subtracted from that are average costs of €141 for two appointments with the primary care physician…and medicine (beta blockers, a tablet a day) – making a positive extra premium of €261 under the line.  

An asthma patient, who goes to the pneumonologist every second quarter and uses the conventional combination spray, provides a plus of €192 a year.

The diagnosis ‘psychological depression’ brings the sickness fund nothing. It’s better when the insured has a ‘light depressive episode,’ then there is almost €1000 extra.
 
So the sickness funds encourage doctors to look for patients who can be diagnosed with an illness that brings an extra premium, and share the profits, while people with conditions not on the government list are out of luck. Nor is there any incentive any longer to improve the health of those who are sick or at risk of becoming so. As Luther put it, “It’s totally absurd when the sickness funds have a bigger interest in the sick than in the healthy.”
 
You can find more information on the structure of German health care system at Biggovhealth.org, the international health care site of the Center for Medicine in the Public Interest (the public policy institute home of drugwonks.com).

While returning from a recent vacation in Berlin, an article in Germany’s leading weekly magazine Der Spiegel on the German health care system caught my eye. Entitled “Das Tollhaus” or “the madhouse,” it’s a rather scathing of exactly what has gone wrong with the recent health reforms in Germany – and a perfect indication of why Americans should spend a little less time debating health care in Canada and the UK and a little more looking elsewhere in Europe. To help in this effort, this will be the first of two posts looking at what Germans have to say about this own system.
 
To most Americans, the German health care system probably looks surprisingly familiar: citizens mostly get health coverage through their jobs, insurance is purchased from Krankenkassen or “sickness funds” that administer premiums and pay doctors and hospitals for care, and visits to the doctor often require a co-pay. But that is slowly changing in response to many of the same problems that plague the US debate, chief among them the affordability of coverage, both on a national level and an individual one. The solutions too are similar – and therein lies Germany’s instructive power for American would-be reformers.
 
Let’s start with universal care. Germany was actually a late comer to the concept and it was only as of the start of this year that every citizen had to have coverage. The results for premiums, however, have been immediate. Until this year, each sickness fund set its own premium and they averaged around 14.9 percent of payroll. But last October, a new national premium of 15.5 percent was announced for 2009, the highest ever. In July, it will go back down to 14.9 percent as part of Germany’s stimulus package.) Der Spiegel explains:
 
In past years, half a million premium payers used the ability to switch from a more expensive sickness fund to a lower priced one. In the tightly regulated sector the different premiums provided a whiff of competitions. However the government set premium now apply and already prepare the way to a single payer. Almost twenty sickness funds, including some that previously had particularly low premiums, have already disappeared. (All translations mine.)
 
Cost has also left some Germans outside of the supposedly universal system, unable to pay for coverage, ineligible for subsidies for the poor, and subject to government penalties if caught. One example is Kornelius C., 57 years old and self employed, who relies on his doctor girlfriend and her colleagues to take care of him because he is uninsured and has an unreliable income. But he isn’t alone. “The problem is that many of those concerned never know how they will pay for coverage. C. was a candidate for the new basic rate for…health coverage. The premium lies at €570 a month…He says he cannot muster this sum even with the best will.” There is one way for C. to pay for his health care coverage, he is eligible for a reduction in the premium and a government subsidy, but it would require that he cease living with his girlfriend.             
 
It isn’t only citizens who face being unable to pay health care costs. The state is also in the red, it will have to put more money than planned into the health system this year and with billions in deficits as a result. One reason is the creation of redundant structures to administer the system and “zombie bureaucrats,” who no longer have any work to do but whose jobs will exist for another three years. The sickness funds are short of funds as well, they will probably have to charge their members additional premiums. But they are given little room to collect extra money since those insured cannot be asked to pay more than one percent of their income. That may mean the loss of more sickness funds if they go broke.
 
Finally, doctors are unhappy with their reimbursement and facing the same dilemma as their American counterparts: the present structure rewards doctors “who sluice as many patients as possible in the shortest time possible through their practices. The younger the doctor’s patient clientele is, the more he earns…Potential losers are any doctor who takes time for the patients. Also retired people are bad for the budget.”
 
However, the incentive to take on healthy, easy to treat patients is only one force acting on doctors, as we will see tomorrow when I look at the perverse inducements created by the system to make patients sicker, not healthier. So stay tuned. In the meantime, for more information on the German health care system and how it works, check out BigGovHealth, the international health care site of the Center for Medicine in the Public Interest (the public policy institute home of drugwonks.com).

Why blog when all you can do is comment on events that underscore why we are closer to single payer health care than ever before....

WASHINGTON, D.C. (April 7, 2009) - Democratic and Republican party leaders and political operatives will discuss their differing perspectives on the challenges and opportunities associated with the comprehensive reform of the U.S. healthcare system during a keynote panel, titled "The Challenges and Opportunities Surrounding Healthcare Reform,” taking place Wednesday, May 20 from 12:00 – 1:45 pm at the Georgia World Congress Center during the Keynote Luncheon at the 2009 BIO International Convention.  

Moderated by Susan Dentzer of The NewsHour with Jim Lehrer, the panel will include Senator Tom Daschle, Governor Howard Dean, Senator William H. Frist, M.D, and Karl Rove. 

"This panel provides an opportunity to discuss and debate the best options and opportunities for the new administration as they move toward their goal of restructuring our nation's health care system,” said James C. Greenwood, president and CEO, BIO.  "As the Obama Administration and Congress explore how to restructure the delivery of the nation's health care services, it is important that the biotech industry is involved in the debate.”

The panel will address the road to a new health care system in the United States, providing a preview to the debates expected to take place in Congress later this year.  Panel members bring with them a vast array of experience in government service, from Congress to the Governorship and Chief of Staff to former President George W. Bush.

Great...that's exactly what we need.   Spin from spinmeisters who will tell the assembled how to behave to get a "seat at the table."  And I am sure they are all doing it for free.  I hope BIO got a good deal on the car service at least...

And how does listening to the same stuff and talking points from the New America Foundation and Rahm Emanuel (at least as far as Daschle is concerned) going to insure that biotech is involved in the debate.  Last time around biotech met face to face with President Clinton and the health proposal still called for comparative effectiveness reviews as a condition for reimbursement and use.   Now it's a done deal and BIO is fine with it.....  Have you seen those principles about "patient-centered" health care anywhere in the FCCER mission.  Anyone?

I still think it is better to stand up for principles before getting a seat at the table....And it's a lot better to give politicians a piece of your mind than to have them lecture you about how to behave in The People's House...  It is still ours...

DDMAC Goes Mental

  • 04.07.2009

If you like comparative effectiveness you’re going to love mental modeling.

The April 3 Federal Register carries a notice about a new DDMAC study, “Mental Models Study of Health Care Providers’ Understanding of Prescription Drug Effectiveness.”

The complete Federal Register notice can be found here.

The notice states:

“The Federal Food, Drug, and Cosmetic Act (the act) requires that manufacturers, packers, and distributors (sponsors) who advertise prescription human and animal drugs, including biological products for humans, disclose in advertisements certain information about the advertised product’s uses and risks. By its nature, the presentation of this risk information is likely to evoke active trade-offs by consumers and physicians, i.e., comparisons with the perceived risks of not taking a treatment, and comparisons with the perceived benefits of taking a treatment. The FDA has an interest in fostering safe and proper use of prescription drugs, which is an activity that necessitates understanding of both risks and benefits. Thus, an indepth understanding of physicians’ processing of this information, their thinking on relevant topics, and their informational needs are central to this regulatory task.”

Stipulated. 

And, according to the FR notice, the path to knowledge lies through “mental modeling:

 “… a qualitative research method that compares a model of the decision making processes of a group or groups to a model of the same process developed from expert knowledge and experience. In this study, the decision models of health care providers concerning their understanding of drug product efficacy and how they communicate their understanding to their patients will be compared to a model derived from the knowledge and experience of experts who review product labeling for the purpose of ensuring that prescribers get the information they need to make optimal prescribing decisions. FDA will use telephone interviews to determine from the health care providers the factors that influence their understanding of drug product efficacy and how they communicate their understanding to their patients. Comparing expert and health care provider responses will allow for a richer understanding of decisions determining drug product efficacy from labeling and other sources and how this understanding is communicated to their patients.”

 Like benefit/efficacy claims:

“Research and guidance to sponsors on how to present benefit and efficacy information in prescription drug advertisements is limited. For example, ‘‘benefit claims,’’ broadly defined, appearing in advertisements are often presented in general language that does not inform patients of the likelihood of efficacy and are often simply variants of an ‘‘intended use’’ statement. In a study involving a content analysis of direct-to-consumer (DTC) advertising, the researchers classified the ‘‘promotional techniques’’ used in the advertisements. Emotional appeals were observed in 67 percent of the ads while vague and qualitative benefit terminology was found in 87 percent of the ads. Only 9 percent contained data. However, for risk information, half the advertisements used data to describe side-effects, typically with lists of side effects that generally occurred in frequently. Additional research is necessary to uncover important information about how consumers understand effectiveness information about prescription drug products from DTC advertisements. This particular understanding is crucial to the risk benefit tradeoff that patients must make with the consultation of a health care professional in order to achieve the best health outcomes. The qualitative information in this Mental Models phase of the research will provide a preliminary framework and help FDA craft subsequent quantitative studies.”

That’s nice but, mental modeling notwithstanding, shouldn’t DDMAC look first to the well-understood failure of both the brief summary and fair balance/adequate provision methods it currently uses?

According to the FDA’s 2002 study, 65 percent of doctors believed that the DTC ads their patients saw confused them about the relative risks and benefits of prescription drugs—and that is a problem. In a 1999 FDA study, 56 percent of patients who saw a DTC print ad said that they read the brief summary “not at all” or “a little.” In the 2002 study that number jumped to 73 percent—an increase of seventeen percentage points. During that same three-year span, those saying they read “almost all” or “all” fell from 26 percent to 16 percent— these ten percentage points are not decimal dust by any stretch of the imagination.

In the “decimal dust” category, consider this: In 1999, 3 percent said that they weren’t aware that the brief summary even existed. In 2002 that dropped a full decimal place to 0.3 percent. In other words, more people knew that the brief summary was there, but fewer people were reading it.

And what about the FDA’s physician labeling rule? Revised in January 2006 for the first time in more than 25 years, the new format requires that the prescription information for new and recently approved products meet specific graphical requirements and includes the reorganization of critical information so physicians can find the information they need quickly. Some of the most significant changes include: A new section called Highlights to provide immediate access to the most important prescribing information about benefits and risks; A Table of Contents for easy reference to detailed safety and efficacy information; The date of initial product approval, making it easier to determine how long a product has been on the market; A toll-free number and Internet reporting information for suspected adverse events to encourage more widespread reporting of suspected side effects; A key-facts section that prompts doctors on what they should tell patients.

The problem is that this new format is prospective.  Previously approved medicines do not need to rewrite their PI in this format.

Something to think about.

Rather than mental modeling, perhaps the FDA should spend some of its precious time and resources developing a PI detailing tool to teach physicians about how to use the label as a potent patient conversation guide?

Sounds like a good project for the agency’s forthcoming “Safe Use of Drugs” initiative.

Here's your Medicare reimbursement joke for today:

A Florida couple, both well into their 70s, go to a sex therapist's office.

The doctor asks, "What can I do for you?"

The man says, "Will you watch us have sexual intercourse?"

The doctor raises both eyebrows, but he is so amazed that such an  elderly couple is asking for sexual advice that he agrees.

When the couple finishes, the doctor says, "There's absolutely nothing wrong with the way you have intercourse."

He thanks them for coming, he wishes them good luck, he charges them $50 and he says good bye.

The next week, the same couple returns and asks the sex therapist to watch again. The sex therapist is a bit puzzled, but agrees.

This happens several weeks in a row.

The couple makes an appointment, has intercourse with no problems, pays the doctor, then leave.

Finally, after 3 months of this routine, the doctor says, "I'm sorry, but I have to ask. Just what are you trying to find out?"

The man says,

"We're not trying to find out anything.

She's widowed and lives with a daughter so we can't go to her house. I'm widowed and live with my son and family so we can't go to my house.

The Holiday Inn charges $98. The Hilton charges $139. We do it here for $50, and I get $43 back from Medicare.”

At just before 5pm last Friday  (April 3), the FDA posted 14 DDMAC warning letters.  They can all be found here:

 
Click Here to Read the Letters

First of all, kudos to the agency for posting them so swiftly.  The letters were all released on April 2 and posted on April 3.

DDMAC, timely?  What’s wrong with this picture?  Or, if you prefer, what’s right?

The next item to consider is the contents of the letters.  They all deal with the same topic, “sponsored” Google links.

DDMAC consistent?  What’s wrong with this picture?  Of, if you prefer …

Consistent because all of the letters not only deal with the same issue of sponsored links, but address them in more or less the same way.  Let’s take the letter to Bayer for example:

Here’s how the letter begins:

The sponsored links cited in this letter are misleading because they make representations and/or suggestions about the efficacy of Levitra, YAZ, and Mirena, but fail to communicate any risk information associated with the use of these drugs.  In addition, the sponsored links for YAZ and Mirena inadequately communicate the drugs’ indications, and the sponsored links for Mirena overstate the efficacy of the drug.  Furthermore, all of the sponsored links fail to use the required established name.  Thus, the sponsored links misbrand the drugs in violation of the Federal Food, Drug, and Cosmetic Act (the Act) and FDA implementing regulations.  See 21 U.S.C. 352(a) & (n), 321(n); 21 CFR 201.10(g)(1), 202.1(b)(1), (e)(3)(i), (ii) & (e)(6)(i).”

 

While the particulars for each of the other 13 letters differ, the basic theme is the same, that the “sponsored links” are not in compliance because they are “misleading” – making “representations and/or suggestions” that DDMAC feels are out of compliance, and fail to present the appropriate risk information.

 

Now, as all you weathered FDA cowhands know – when it comes to DDMAC letters (and every other piece of FDA communication) – it’s very important to understand what’s in the letter as well as what is not.

 

These letters are about sponsored links.  What does that mean?  Sponsored links, as the DDMAC letters illustrate, are those links in the “sponsored” section of a web search (in the case of Google, these are the search results that appear on the upper right hand side of the page).  Never more than a few lines, they are teasers.  And, not to put too fine a point on it – they are paid for product marketing messages. They are advertisements.

 

The DDMAC letter to sanofis-aventis is particularly instructive on this point:

 

“Omission of Risk Information

 

Promotional materials, other than reminder pieces, which include the name of the drug product but do not include indications or other representations or suggestions relative to the drug product (see 21 CFR 200.200, 201.100(f), 202.1(e)(2)(i)), are required to disclose risk and other information about the drug.  Such materials are misleading if they fail to reveal facts that are material in light of the representations made by the materials or with respect to consequences that may result from the use of the drug as recommended or suggested by the

materials.  The sponsored links present the following claims (emphasis in original):

 

* PLAVIX Medication Lowers Risks of Future Heart Attack or Stroke from PAD. See how prescription PLAVIX medication may help patients with recent heart attack, recent stroke, or established P.A.D. at PADfacts.com … “

 

So, DDMAC is making the point that sponsored links such as these are being considered as “reminder ads” gone wild.

 

Guidance?  What guidance?  DDMAC letters should help companies understand what “in compliance” means. These letters do not.  In fact, they make things more muddled.  After all, “sponsored links” are by no means a new phenomenon.

 

Podium policy via Warning Letters is not a replacement for clear and concise guidance.

 

Okay, so wither “guidance?” Consider some official agency direction that is already on the books:

 

Post-marketing Safety Reporting for Human Drug and Biological Products Including Vaccines

 
Click Here to Read the Report

 

“Applicants should review any Internet sites sponsored by them for adverse experience information, but are not responsible for reviewing any Internet sites that are not sponsored by them.”

 

It’s not a leap of faith to understand the implications (and applications) of this relative to the concept of sponsored Google links.

 

For example, what about the concept of “clicking thorough” to full risk/benefit information?  Let’s look to the GSK letter for that one.  DDMAC writes:

 

We note that these sponsored links contain a link to the products’ websites. However, this is insufficient to mitigate the misleading omission of risk information from these promotional materials.”

 

Now, here’s where it becomes less clear.  How will this impact regulatory perspectives on branded product websites?  What about third party websites that have been constructed with grants (unrestricted or otherwise) from interested parties?  What about links and websites for devices and diagnostics?

 

What about predictability

 

Well, that’s harder than it sounds because regulators love ambiguity. Ambiguity is power.  And that’s particularly true for DDMAC issues that quickly bump up against the First Amendment. That’s why interpretation of FDA actions is such a vibrant cottage industry. Industry, on the other hand, seeks clarity. They want bright lines. They want to know the rules. They want predictability. This may sound simple, but it has proven to be a fractious bureaucratic kulturkampf within the FDA.

 

My sources inside the agency (but outside of DDMAC) tell me they were caught by surprise by these new DDMAC letters.  What does this mean?  Does it expose the probability that this important social media issue was not discussed at higher levels?  You be the judge – but you can bet they will be now.  In fact, I wouldn’t be at all surprised to see this issue discussed at a sitting of the Risk Communications Advisory Committee.

 

(In fact, it should have been discussed before the letters were sent out in the first place – that’s what advisory committees are for. But that’s just my opinion.)

 

Here’s something that isn’t opinion -- sending out Warning Letters isn’t guidance – it’s punitive regulatory action.  It’s FDA acting tough without putting in the time and brainpower to explain how to address the perceived problem. That’s not what we need.  That doesn’t advance the pubic health.

 

Regulators change industry behavior by changing the rules of the game. But changing the minds of regulators, having them embrace bright lines rather than broad definitions, is a distinctly more challenging proposition, because changed minds must begin with change agents within the agency itself.

 

Predictability is power in pursuit of the public health.

Can one be an active participant within any professional domain without having some potential conflicts of interest? The enthusiastic pursuit of any scientific endeavor requires that an informed person take positions on various matters where controversy may exist, and one must presume that any and all experiences a practitioner endures may influence that party’s perception of certain issues. The NIH website defines that a conflict of interest... “occurs when individuals involved with the conduct, reporting, oversight or review of research also have financial or other interests, from which they can benefit, depending on the results of the research.”
 
It came as no surprise that the April 4th edition of JAMA.com included a special communication authored by 11 individuals entitled “Professional Medical Associations and Their Relationship with Industry - A Proposal for Controlling Conflict of Interest”. Issues involving conflicts of interest have permeated recent professional and lay press, including events involving several high profile PMA (professional medical association) groups. In many ways, the commentary and suggestions provided in this article are welcomed and appropriate - especially relating to the absolute need for transparency and avoidance of conflicts for those involved in drafting practice guidelines and similar standards.
 
However, in the NFL parlance of “upon further review”, the fervor of this article’s plea for near-absolute separation of PMAs and pharmaceutical industry (ironically, also termed PMA - the Pharmaceutical Manufacturers Association, until a name change a decade ago to PhRMA) includes very curious exclusions permitting professional groups to accept advertising in medical journals, as well as sponsorship of exhibits at PMA conferences. The article notes in one section that “Under no circumstances should PMAs collaborate in industry marketing activities or profit from them.” (when discussing guidelines for satellite symposia), while elsewhere in the text stating “Although attracting advertising and exhibit hall fees might possibly bias the activities of PMAs, officers and members can easily distinguish these marketing activities from educational presentations and are free to ignore them”. Aside from the contradictory nature of the two preceding statements - unless one presumes that ads do not constitute marketing (and it would be hard to refute that of all industry pursuits, simple advertising is the most overtly commerical venture, and hence that with the clearest financial conflict), or that physicians are not sufficiently insightful to use their judgement in any but the most overt circumstances - both of which are misrepresentations at best, the broader implications of the PMA recommended actions could play out quite remarkably.
 
It is tempting to speculate that the pharmaceutical industry may view this JAMA article as a “wake up call” regarding the fact that they have continued - like somnambulists - to subsidize their harshest critics - the professional journals such as JAMA and NEJM - via advertising revenues, without even the opportunity to provide fair balance in point/counterpoint editorial responses to scathing rebukes. One must wonder why big Pharma does continue to run ads for doctorly journal readers who can’t easily prescribe off-formulary and are in institutions which have banned sales reps, thus deafened to commercial appeals..... and perhaps the current economic climate will render this issue moot. However, given that medical journals are likely receiving millions in industry advertising revenues, it would be very appropriate for their editors to disclose to their membership (and the public) the percent of journal budgets covered by such pharma fees..... and would be an ironic juxtaposition to the journal attacks on PDUFA funding of FDA as being an implied conflict of interest (though PDUFA funds are actually taxes, and FDA is not bound to take any favorable actions for industry, merely to meet timelines for action - positive or negative...... and at least industry gets the chance for due process and hearings under the User Fee Act). Further, if any believe that the only conflicts which exist in research are financial matters (and therefore have no relationship to the pursuit of power, influence and other less tangible but equally compelling forces - though much more covert that commercial concerns.. and with equal potential for benefit by those with conflicts), might I suggest that those individuals sip a bottle of Evian and contemplate that brand name in reverse.
 
Pharma has not cornered the market for conflicts. In the future, in matters of conflict of interest, all parties are best served if policies concentrate on content, rather than source of data..... that uniform standards are agreed for all constituencies (not an isolated sector), and that failures to adher to proper transparency and disclosures be dealt with severely, and consistently.

Dueling Peters

  • 04.03.2009
On March 5th, at the National Disclosure Summit, I debated Peter Lurie (of Public Citizen fame) on the topic of transparency.  It was billed as “Dueling Peters,” and it lived up to its billing.

Here is a video link to our friendly but fractious (and often funny) forensic foray.

It’s worth watching.

On another note, this is proof positive that two people who hold strong opposing views can have a robust debate that is disputatious, substantial and respectful.

Well, sort of.

The Center for Medicine in the Public Interest (the public policy institute home of drugwonks.com) is a member of the Health Policy Consensus Group, an affiliation of policy experts from major market-oriented think tanks and others who work together to advance patient-centered ideas for health reform.

That group has many ideas about how to move healthcare reform ahead in an expeditious and responsible way -- but our immediate concern is with many of the programs being both implemented and considered by the new administration.

First do no harm.


To that end we have issues the following statement:

Statement on Health Reform 

__________________________________________________________

Would the health reform prescriptions offered

by President Obama and Congressional leaders help patients?

From the Health Policy Consensus Group

President Obama repeatedly has reassured the American people, “If you've got health care already, and probably the majority of you do, then you can keep your plan if you are satisfied with it. You can keep your choice of doctor.”  Research shows 82 percent of Americans rate the health care they receive as good to excellent.

At the same time, there are serious problems of cost, value, and access throughout our health sector.  It is vital to address these problems.  But any health reform proposal to change what needs fixing also must preserve the freedom, innovation, and quality of American medical care that people value.  We believe a better functioning, more competitive, and transparent marketplace would cover more people and deliver the higher-value care we seek.

We are gravely concerned that several of the proposals offered by the President and the Congressional leadership would make matters worse, not better.  These flawed prescriptions for radical change should not be accepted as part of any serious and sustainable health reform proposal: 

  • A new government health insurance plan
  • An employer "play-or-pay" mandate
  • A uniform, government-defined package of benefits
  • A mandate that individuals must purchase insurance
  • A National Health Insurance Exchange extending federal regulatory powers over private insurance
  • Federal interference in the practice of medicine through a federal health board, comparative effectiveness review, and other government intrusions into medical decision-making

As to why we explain below why we believe these ideas would diminish individual Americans’ freedom and control over their personal health decisions, please see the complete Statement on Health Reform here.

There are many problems that need to be addressed in the health sector, and the signatories to this statement have written extensively about our ideas for reform. Because the reform agenda is moving rapidly through Congress, we believe the American public should be aware of the likely impact of the policies described in this statement which are under active consideration by elected leaders.

We believe that the proposals put forth by the Administration and Congressional leaders would harm, not help, patients and would not fulfill the goals and promises made to the American people.

Obama and Biotech

  • 04.01.2009
Creating the conditions for biomedical innovation is a lot cheaper than spending bailout money to keep car companies operating by lending them money, giving consumers loans to buy the cars they can't afford in the first place and then covering the warranties and car payments.

Biotech gets short shrift from Obama
His policies don't support entrepreneurial medical innovation.
By ROBERT GOLDBERG
Vice president, Center for Medicine in the Public Interest


President Barack Obama said last month that small businesses "are the heart of the American economy." He promised his administration would do everything it could to help entrepreneurs since they were the "core of America's story."

Yet, Obama's policies are threatening biotechnology – one of the most vibrant and important forms of small business our nation has ever produced.

Medical innovations have added wealth and health to our nation. From 1970-2000, increased longevity added approximately $3.2 trillion per year to national wealth, the equivalent of half of the average annual gross domestic product over the period.

According to a 2004 study by the Milken Institute, biopharmaceutical companies are responsible for creating over 2.7 million jobs across the United States. The industry was directly responsible for $63 billion in real output in 2003 and a total output of over $172 billion when its ripple effect is figured in across other sectors.

The president has increased federal funding for basic research and stem-cell science. With $20 billion a year in research funding, the National Institute of Health is important. But to translate discoveries into treatments will require more than the nearly $60 billion in money currently being invested by pharmaceutical, biotech and venture capital firms on cutting-edge treatments for cancer, Alzheimer's, AIDS, mental illness and heart disease.

That investment is (in real dollars) declining. Less than half of all public biotech firms have six months of cash left for research. For startups the situation is direr, even though the scientific promise of their investment is great.

Yet at every step of the way, President Obama supports policies that will stifle the entrepreneurship that he praises, and which are vital to actually producing real cures.

Obama supports de facto price controls that would allow the "reimportation" of prescription drugs. In essence, this is an effort to force every pharmaceutical and biotech company to sell drugs here at the controlled prices imposed in Canada and Europe.

Yet these are the same price controls that shut down medical innovation in those nations – companies sell their wares there for a small profit, but they don't risk the money to develop new lifesavers for those markets. If reimportation worked to force down prices here, it would also shut down the innovation Obama claims to favor.

Obama is establishing a comparative effectiveness council to slow down the introduction of new medical technologies. This entity would, like similar agencies in England and elsewhere, allows economists to compare old treatments with new ones and then tell doctors how much someone's life is worth – and whether it's worth saving – in order to save money.

The impact on innovation and patient well-being should be obvious. The UK's comparative effectiveness panel said new cancer pills were more effective than debilitating chemo treatments and extended life but still weren't worth paying for. No wonder the UK biotech industry issued a report blaming comparative effectiveness for killing not only people but the incentive for innovation.

Obama wants to apply comparative effectiveness to Medicare and eventually to every health plan. This would delay and ration the elderly's use of breakthrough drugs and ultimately let the government control what drugs and treatments everyone can take. In Europe, over the past 10 years, similar restrictions have caused the development of new drugs to stall. From 1993-97, Europe launched 81 breakthrough drugs; from 1998-2002, just 44. Meanwhile, U.S. drug launches jumped from 48 to 85.

Finally, it is disappointing that Obama made food safety, not medical progress, his number one concern in reforming the Food and Drug Administration. Indeed, Obama added money to the FDA's budget to inspect spinach but not to speed up the approval of breakthrough drugs for spinal cord injuries, multiple sclerosis and rare diseases. The agency has a program using 21st-century science – such as gene and stem cell-based tests – to determine if new medicines work. But Obama has refused to add money for that effort. You can score more political points sticking it to drug and biotech companies than standing shoulder to shoulder with dying patients.

Together, these policies are draining the life out of the biotechnology industry. The president is investing in "green" technologies to promote the environment. Yet, his health care policies will undermine private sector investment in medical innovations critical to solving public health problems related to the aging and growth of the world's population.

For all his rhetoric, thanks to his policies the medical discoveries the president supports will never be translated into economic prosperity or treatments that transform humanity.

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CMPI

Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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